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The Congress on Tuesday accused the Bharatiya Janata Party (BJP)-led National Democratic Alliance government of mishandling the minimum alternate tax (MAT) issue on foreign portfolio investors that had 'spooked' the markets and led to withdrawal of Rs 12,000 crore of money from the equity markets.
While Finance Minister Arun Jaitley had resorted to "damage control" by putting on hold fresh MAT notices to foreign institutional investors (FIIs) on past cases, the Congress lashed out at the FM for "the lack of clarity and confusion" making investors apprehensive.
Hitting out at the government's "tax terrorism", a term the BJP itself had used attack the Congress-led United Progressive Alliance for invoking the retrospective taxation, Congress spokesperson Rajeev Gowda urged the government to curb its tax-related misadventures.
The finance ministry had on Monday announced that in view of the formation of a committee set up under retired judge A P Shah to look into the issue of MAT notices to FIIs, the assessing officers in the Central Board of Direct Taxes had been directed not to take any coercive action for recovery of demand already raised by invoking provisions of MAT in the case of FIIs. The issue of fresh notices for reopening of cases has also been put on hold unless the case is getting barred by limitation. The move was taken after a number of FIIs approached tribunals after receiving MAT notices for previous assessment years. A total demand of Rs 603 crore was raised in notices sent to 68 FIIS.
Speaking to reporters on Tuesday, the Congress spokesperson said such actions "have come after Rs 12,000 crore of investments have been withdrawn by foreign investors, resulting in steep falls and significant volatility in the Sensex and Nifty, hurting the small investor." He added that even the rupee was hurt by the withdrawal of foreign investments.
Recalling how Jaitley during the 2014 campaign trail had lashed out at the then UPA government on retrospective tax, Gowda said the recent developments sent out "very poor signals about Jaitley's control over his department".
